The U.S. housing market is primed for investment for those with good credit and money for a down payment thanks to low prices and mortgage rates, but experts warn buyers should take this as an excuse to not do their homework. Three things every mortgagee should consider are long-term finance goals, the total cost of the loan and understanding the “big picture” when it comes to refinancing or purchasing a home. Armed with this knowledge, it’s possible for prospective buyers to secure excellent financing for homes priced well below their traditional values. For more on this continue reading the following article from TheStreet.
There’s great news for that most elusive of consumers — the house hunter with a golden credit rating and cash in the bank to buy a new home.
Home prices remain low, as supply exceeds demand across the U.S. In addition, the National Association of Realtors reports that pending U.S. home prices declined on a monthly basis by 5.5% in April (although home sales are up over April 2011).
The NAR’s chief economist, Lawrence Yun, implies that buyers may want to strike while the iron is hot — and prices are low. He says that the April numbers represent a short-term dip, and that the long-term fundamentals in the housing market are actually fairly sound if Congress and the White House can get their financial act together.
"Home contract activity has been above year-ago levels now for 12 consecutive months," Yun says in a May 30 press release. "Housing market activity has clearly broken out at notably higher levels and is on track to see the best performance since 2007. All of the major housing market indicators are expected to trend gradually up, but a new federal budget must be passed before the end of the year for the economy to continue to move forward."
With 30-year fixed mortgage rates once again under 4% (they’re at 3.84% this week, according to the BankingMyWay National Mortgage Rates tracker), maybe it really is a good time to buy.
If so, don’t go in with blinders on. The mortgage process is loaded with tripwires and potholes that can derail the best-intentioned and most frugal homebuyer.
To help consumers get a better grip on shopping for a mortgage, LendingTree has some helpful tips. In a release sent today, LendingTree outlines three key questions mortgage industry insiders would ask if they were shopping for a mortgage. The tips come from a survey of 300 U.S. lenders in the LendingTree network, and constitute what the online lending giant calls the mortgage industry’s "point of view" on getting a mortgage.
Here are three key questions to ask — and answers to absorb — for consumers from the LendingTree survey:
1. What is the most important thing a borrower should know when beginning the mortgage process?
Top answer: Know financial goals and priorities. (For example: Do you want to lower your monthly payment? Do you want to shorten your mortgage term and build equity faster? Do you want to get the lowest rate possible?)
2. In your opinion, what should all borrowers ask their prospective lenders?
Top answer: What are the total costs involved with the loan? (For example: processing fees, down payment required, closing costs, administration fees, appraisals, amortization schedules)
3. What is the biggest/most common mistake you’ve seen borrowers make?
Top answer: Basing decisions on interest rate alone and ignoring the "big picture."
As always in the consumer finance market, arming yourself with as much insider information as possible can make a huge difference in getting a great mortgage, or getting saddled with a lousy mortgage that may haunt you for years, LendingTree says.
"Consumers have very little confidence that they will be able to qualify for a mortgage, let alone find a great deal when it comes to a home loan," says Doug Lebda, chairman and CEO of LendingTree. "But with rates as low as they are, borrowers have the opportunity to tap into substantial savings. If you have the right information, know what do and what to avoid, there’s no need to be intimidated or shy away from the process."
Start with the three questions posted above, and you’re well on your way to grabbing the best mortgage deal for you.
This article was republished with permission from TheStreet.